Construction Sector in Brazil Beat Pandemic in 2020, Should Boom in 2021 – Executives

RIO DE JANEIRO, BRAZIL – Despite the devastating pandemic, one sector has been extremely resilient, with a fast rebound and surprising figures. According to executives from building companies and developers, 2021 should be one of the best years for construction in Brazil, with a major advance in real estate market launches and revenue expansion.

This projection occurs despite the uncertainties surrounding the Brazilian economy, with the likely end of the emergency aid and the residual impact of the global crisis.

The construction activity level recorded an increase for the fourth consecutive month, which attests to the trend towards recovery in the sector. According to a November survey by the National Confederation of Industry (CNI), operating capacity utilization in the sector reached 63% in the period, the highest level since December 2014. The survey also shows that business confidence remains high in the sector.

According to Diego Villar, president of Moura Dubeux, the pandemic had a positive impact on construction because people finally reflected on how they live. “What also contributed to the sector’s performance this year was the repressed demand. The real estate market had many years with no launches.”

According to the executive, 2021 will be one of the best years for the real estate market. “The federal government should retake the fiscal balance path, in a perspective of dollar stabilization and continue the debates on reforms, particularly the fiscal one. Demand will be even more heated,” he believes.

The company’s general sales value reached R$770 million from the launches which started in August. The amount is more than double of what was registered last year. Moura Dubeux reserves record launches for 2021 across the company’s history.

With the basic interest rate (SELIC) at an historical low, the setting is favorable for the purchase of real estate, particularly in the mid-range standard. For Rodrigo Resende, MRV’s marketing and new business director, SELIC may see some corrections next year, but still timid.

“We believe that the SELIC will remain much lower than in the recent past. Brazil is joining the global trend of low interest rates.”

As financing tends to become more attractive, the sector should reap the fruits of this policy next year. “Irrespective of the pandemic, the interest rate remains attractive to the sector,” adds Resende.

Engeform, a building company that in 2020 totaled R$1 billion in sanitation works alone, is benefiting from the current environment. “The low interest rate provides better conditions for the company to boost its business and enable it to operate at levels that would not have been possible before,” says André Abucham, the company’s CEO.

In addition to its performance in sanitation, the company has just closed a contract to raise two corporate towers in the Juscelino Kubitschek Avenue area, São Paulo’s financial center. JK Square São Paulo will cover approximately 70,000 square meters, five basements and a first floor with 12 stores, where a living area will be installed with open mall style spaces for circulation and permanence.

“Demand remains strong in the real estate market, offices are undergoing a reinvention. Companies will have to adjust their spaces to suit the post-pandemic”, says Eduardo Araújo, Engeform business manager.

Mac Construtora, which in 2020 recorded a general sales value of R$450 million, expects five launches for next year and a 20% growth in revenue.

The company is focusing on the improvement of the housing concept in its new launches. “People are searching for more functional apartments, with room for a home office and common areas in which they can live with their relatives”, says Ricardo Pajero, Mac trade area CEO.

Laguna, from Paraná, which this year should total a general sales value of R$150 million in incorporation, an increase of 15% over 2019, is also investing on this project. The company operates heavily in apartments costing over R$2 million.

“We offer acoustic and thermal comfort, in addition to differentiated plans. This is now highly valued in the pandemic,” says André Marin Laguna, Laguna Group’s director of incorporations.

In a scenario of a housing and infrastructure deficit in Brazil, the horizon is highly positive for the business. The market is betting on a sharp rebound. The question remains whether the risks surrounding the Brazilian economy will be overcome and whether the sector will finally be able to benefit from the great potential so much talked about in the country.